This week’s Department of Justice “Catch of the Week” goes to MediSys Health Network, the owner of New York City hospitals Jamaica Hospital Medical Center and Flushing Hospital and Medical Center. On Wednesday, the hospital system agreed to pay $4 million to settle charges of violating the False Claims Act and Stark Law by engaging in improper financial relationships with referring physicians. See DOJ Press Release.
According to the government, the defendant hospitals submitted claims to Medicare for services to patients referred by physicians with whom the hospitals had improper financial relationships. Specifically, these relationships involved compensation and office lease arrangements that violated the Stark Law, which restricts the financial relationships hospitals may have with doctors who refer patients to them.
In announcing the settlement, the government stressed the importance of these anti-referral restrictions, noting how the improper financial incentives that flow from them “can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” and put into question “whose best interests are being served.” The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dr. Satish Deshpande. Dr. Deshpande will receive a whistleblower reward of $600,000 from the proceeds of the government’s recovery.
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